Many people have a certain spot that they like to visit very frequently when they vacation. If you spend alot of time there, you may be wondering if you should go ahead and buy a property there instead of continuing to pay to rent a house every time you go. If you go once a year, buying another house really isn’t worth it if you don’t use it fairly often. You’ll need to figure out if buying another home is a smart move for you financially. To figure this out, you’ll have to think about many different things such as what the expenses would be, advantages and disadvantages of the location, and how much taxes and the downpayment will cost you; just to name a few examples. Also add up what you typically spend traveling to that destination, to what it would cost to own it. See if you feel that it is worth it to you to own rather than rent.
Adding up rental costs is not difficult. Rates usually are charged per night. The rates can differ depending on whether it is the “on” or “off” season. Rentals charge way more during the on seasons, as thats when everyone travels to the area for vacation. The rent will also vary according to how nice the rental is, where it is, and how large it is. For example, renting a large cabin in the mountains during summertime is going to cost much less than it would during the winter.
You’re going to have to figure out how much interest you’d be paying in mortgage each year if you were to purchase a home. There are also other expenses besides mortgage interests, such as taxes. You should know upfront that it is much more difficult to get approved for a loan on a second house. Also, you are going to have to put down a bigger downpayment and a much bigger mortgage. The usual 20% downpayment isn’t going to cut it when you buy another home. The bank is going to require you to put more money down than you did for your first home.
You need to talk to a real estate agent in the area to see how the home prices have fluctuated over the years in different areas. This is so that you can get an idea as to whether you’re going to earn money, lose money, or break even if and when you decide to sell the home. Buying real estate is almost always a gamble, as the real estate market is unpredictable.
You’re also going to be paying double expenses. You’ll be paying them for your first home as you already do, and for your new home. There are taxes, utilities, any required maintenance, plus fees to the realtor if you plan to rent your apartment when your’e gone. If you are able to, renting while you are away is an excellent option, and unless something major is stopping you, you should. Depending on where you purchase the home, you can charge a lot of money for vacation homes. This is money that can go toward your mortgage.
Here are some other things to think about when deciding if you should take the leap and buy a house. Think about what the process usually is when you rent there. Is it hard to book a unit, or a house? Do you have one in particular that you like that isn’t always available? Sometimes, you get stuck with a rental that you don’t enjoy. If you own the second home, you’ll never have to deal with any of that.
It is extremely important that you don’t make this decision without thinking through all of the pros and cons. While articles like this, and other information on the internet is helpful and available, you need to speak with realtors in the area. They know the ins and outs of the market, and will be able to help you determine what you should do. Good luck!